COMPETITION • FRENCH LAW • ABUSE OF DOMINANT POSITION
According to the Competition Authority, a margin squeeze occurs in a situation where undertaking A, a vertically integrated company, is in competition with undertaking B on a retail market and where B depends on A for the supply of an input which is essential to its presence on the downstream market: a margin squeeze is observed where B – considered to be equally efficient as A – cannot, in a manner which is sufficiently profitable to allow it to continue its activity on the downstream market, match the price charged by A, taking into account the price demanded by the latter for the input.
For the Court of Cassation, “margin squeezes have an anticompetitive effect if a potential competitor which is equally as efficient as the vertically integrated dominant operator responsible for the practice is only able to enter the downstream market by incurring losses; such an effect may only be presumed where the services supplied to its competitors by the company carrying out the margin squeeze are essential to allow them to compete with it on the downstream market”. In the absence thereof, it is necessary to locate and prove the anticompetitive effect of the practice on the downstream market.
